LIVERPOOL, N.Y. - After applying an extraordinary charge to account
for early retirement of debt, Fay's Inc. reported a 6.7% earnings
gain on a 17.2% jump in sales during fiscal 1991, ended January 26.
Fay's recorded net profits of $11.1 million during the 52 weeks,
compared with $10.4 million in fiscal 1990. Volume, buoyed by an 8.9%
same-store sales increase, reached $672.6 million from $574.1 million.
Full-year earnings for the operator of drug, auto parts and stationery
outlets would have been considerably higher had it not decided to redeem
and make open market buys of its 13.8% subordinated debentures, due
2005. By purchasing $27 million worth of those securities, Fay's
assumed a $1.24 million extraordinary charge, which cut into its $12.3
million after-tax profits. That total represented an 18.3% improvement
from the previous year.

Comparisons were also impacted by a very low tax rate of 34.8% that
was applied during fiscal 1990, at which time Fay's utilized
capital-loss carryforwards. Consequently, pre-tax profits rose 29.6% to
a record $20.6 million from $15.9 million.

During the fourth quarter Fay's earnings jumped 43.5% to $5.05
million from $3.25 million, as sales rose 17.9% to $190.7 million from
$161.7 million. Comparable-store sales advanced 7.5%. Pretax, profits
skyrocketed 67.4% to $8.57 million from $5.12 million.

Commenting on his company's performance, chairman Henry
Panasci Jr. says, "We are very pleased with our results for both
the fourth quarter and the year. We achieved excellent comparable-store
gains, while showing improvement in gross margins and operating expense
ratios. The current economic situation has not dampened our
expectations. We feel confident that our momentum in sales will continue
and further improvement in expense ratios is possible."

Fiscal 1991 was a busy expansion year for Fay's, which
expanded on all of its retail fronts. The chain opened nine super drug
stores, nine Paper Cutter units and two Wheels discount auto supplies
outlets. Moreover, the chain acquired 15 drug stores, while closing one,
giving it 197 of these outlets in New York and Pennsylvania.

Just 11 days after the close of its fiscal year, Fay's
announced that it had entered into an agreement in principle to purchase
the capital stock of Carls Drug from Victory Markets Inc. This
transaction would add up to 48 drug stores in central, southern and
northern New York to Fay's roster.

COPYRIGHT 1991 Racher Press, Inc.
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